Sunday Property Round-Up, November 5th

(As always, apologies for any typos, it’s difficult to get good help on a Sunday!)

The horse has bolted so An Taoiseach does the only thing he can do, he shuts the stable door

The only story that counts this week must surely be the decision by Apple to cancel the construction of their proposed €850 million data centre in Athenry, Galway. It must be pointed out that different broadsheets take a different approach to the story today with the Sunday Business Post maintaining ‘Government confident of Apple data centre being built’ whereas the Sunday Independent reports on the separate meetings with the IDA and An Taoiseach that signalled the end of the planned project.

While IDA chief, Martin Shanahan, is correct in calling the decision by the tech giant “understandable”, it is a massive blow to the construction industry and for the designers and contractors involved. We have had so many wasted opportunities manifest in this particular sector that it feels trite to call this one the biggest and most wasted opportunity of them all, but there really is no other way to view this. The industry has been let down by our utterly broken planning system and by policymakers who simply didn’t act in time. Not only is this a monumental loss, it is also possibly the most frustrating one in terms of how it came about. We can assess the loss of the construction phase and the jobs associated with that, we can even assess the loss of the jobs that would’ve been created and the knock-on affect that this increased employment would have meant, however, the true value to the local area of Athenry and to the wider community is, in my opinion, incalculable. There were rumblings of Apple’s frustration over the pre-planning, planning and review process even before the court challenges. As the challenges persisted, there was of course a threat that the tech giant would walk away from the project but I genuinely don’t think the industry believed this would happen. More accurately, they believed that their Government would not allow for circumstances that would make Apple walk away. For An Taoiseach Leo Varadkar to attend Apple HQ in Silicon Valley this week and effectively beg executives to reconsider at this late stage shows an intolerable lack of appreciation for how corporate thinking works. He purported that the Government “would do whatever possible to facilitate the development“, however, the tech boss Tim Cook indicated the company had waited long enough and was ready to proceed elsewhere, outside of Ireland. This loss to the sector goes so far beyond Apple and the consequences are likely to be far-reaching. Furthermore, it completely undermines the strategic work of the IDA And has the potential to negatively impact Ireland’s ability to attract much-needed foreign direct investment in future. In order to avoid this happening again, Leo Varadkar has confirmed that data centres it will be considered to be “strategic infrastructure“ for planning purposes going forward. This ‘too little too late’ non- solution is unlikely to appease industry frustrations right now.

Whether or not this huge-scale project goes ahead, and of course we hope it does, policy shortfalls in the planning process must be addressed immediately.

Other property news

Roisin Burke, writing in the Sunday Business Post today, declares that ‘World Trade Centre for shipping finds a home: Major development on both sides of the Lee in Cork would be a new city quarter’. This refers to the planned €1 billion project to develop a centre for world shipping on a 70-acre site close to Kent Station at the Port of Cork. CBRE director Cormac Magannety said that “This would be the biggest urban regeneration project in Ireland. It would be a new city quarter”.

The Sunday Independent today reports that ‘Nama raises security in face of occupation threat’. This story, by Niamh Horan, reports that Nama has been forced to tighten security following information from gardai that activists are planning to occupy a property owned by Paddy McKillen and Johnny Ronan – and managed by Knight Frank.

Philip Ryan has an interesting piece with the headline ‘Remove objection or we will sell development to social housing’. This refers to a threat made by developer Bernard McNamara on foot of a planning objection by a local resident against a proposed development of 29 houses in Donabate, north County Dublin. The resident in question withdrew their appeal and the developer has declined to comment but it’s arguably not a great way to do business. At a time when developers are more conscious of their brand/reputation this seems to be heavy-handed – albeit understandable – approach to community engagement.

New home buyers at Cairn Homes’ flagship development, Marianella in Rathgar, south Dublin have been frustrated to learn of a three to four month delay in moving into their new homes. The property company is currently ramping up home sales, with a forward pipeline of €188 million as of late September. Chief executive, Michael Stanley, went on to say “we are currently building on nine sites, which will deliver 3,250 new homes. We’re actively selling on seven sites, soon to be eight.“

Ronald Quinlan writes that ‘Property Group’s ‘Dublin Living’ housing sale hit by 11th-hour title snag: Developer Pat Crean is working to perfect the title at one of four sites’. This refers to the intended sale by the Marlet Property Group of a portfolio of 1,205 apartments currently under development in Dublin’s Harold’s Cross area to an international investor for an estimated €450 million.

Ailish O’Hara writes that ‘Finnish model may be key to solving housing crisis’. This opinion piece points out that Finland is the only country in the EU that has managed to reverse the trend of growing homelessness. This is credited to the so-called “Nordic model“ common to Sweden, Denmark, Finland, Iceland and Norway and involves combination of free -market capitalism and collective bargaining at a national level and a comprehensive welfare state. The author suggests “what we can do is try to strike a better balance between the private and public sectors and the provision of housing… One of the underlying issues here is the view that your house is your wealth – which really it is, given a relatively low tax system that is not designed to cover healthcare or education fees, for example which are factored into the Nordic model”.

Donal Buckley, writing on commercial property in the SBP reports that ‘Funders flock to back new home schemes: There are some criticism of high interest rates charged by alternative funders, but interest in the sector is definitely heating up’. He finds that “overseas and Irish capital providers are increasingly attracted to funding opportunities in the Irish residential development market”. This has been seen in recent times by the stock market flotation of Cairn Homes and Glenveagh properties, which raised a collective €1 billion. Following the announcement of the Home Building Finance Ireland Agency (essentially an evolution of Nama) in Budget 2018, Donal looks at the alternative sources of development finance in Ireland, namely: Activate Capital, Broadhaven Credit Partners, Castlehaven Finance, Lotus Investment Group, RAM capital and WLR Cardinal Mezzanine Fund. He makes no reference to the proptech crowdfunding options popping up so I will write a piece about this over the next week or two.

The KPMG Irish Independent Property Excellence awards 2017 shortlist has been announced so congratulations to all nominees and best wishes to each organisation for the awards, which take place on November 23 at the Convention Centre Dublin!

To keep up-to-date on all things tech and innovation for the planning, construction and property industries, head over to http://www.prop-tech.ie, the national resource website for innovators, investors and mentors.

We have no more free mentoring sessions for #proptech start-ups available in 2017, however, we are now taking appointments for dates in January, February and March before this CSR initiative ends, email news@prop-tech.ie for details.

Property Insiders Guide

Also, as regular readers will know, the Irish Property Buyers’ Handbook is being updated for 2018 and I would love to hear about any experiences in the market or new services, technology and trends for buyers. As always, you are welcome to email me with any industry news and updates at Carol@CarolTallon.com.